Will China now impose tariffs on cars, including those from Germany?
The beneficiaries would be Chinese car companies such as $9866 (+7.01%)
$1211 (+1.34%)
$9868 (+6.53%)
$1810 (+1.66%)
Where do you think the journey will take the Germans in the future?
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China is stepping on the gas when it comes to e-mobility! The Chinese government has approved a huge package worth 520 billion yuan (approx. 66 billion euros) to boost demand for electric cars and other environmentally friendly vehicles.
To spur the purchase of e-cars, those who opt for an electric vehicle in 2024 and 2025 will be exempt from purchase tax of up to 30,000 yuan. From 2026 and 2027, the rebate will then be only half that amount. In total, the tax relief amounts to the said 520 billion yuan, according to Deputy Finance Minister Xu Hongcai.
So-called New Energy Vehicles (NEVs), which include battery-powered electric cars, plug-in hybrids and hydrogen fuel cell cars, are already exempt from purchase tax until the end of 2023. And now this measure is also being extended for another 4 years. This has exceeded market expectations and will further drive the growth of electric vehicles in China. The car manufacturers can rejoice!
The shares of the Chinese electric car manufacturers $9866 (+7.01%) and $9868 (+6.53%) have benefited accordingly, rising 6.1% and 5.5%, respectively. The tax breaks are part of a larger plan by the government to boost the economy and curb air pollution. The switch from combustion engines to electric motors is high on the agenda.
Earlier this year, sales of electric cars took a small dip when the government ended a longstanding subsidy for e-vehicle purchases. However, thanks to lowered prices from manufacturers such as. $TSLA (+6.17%), to defend their market share, sales have recovered. So the signs are all pointing to electric!
China is once again showing that it wants to be at the forefront of e-mobility. This is a real step in the right direction for a more sustainable future on the roads.
Are you invested in Chinese e-car manufacturers like Nio or Xpeng? What do you think of the billion-dollar package that the Chinese government has agreed to? I think it's the right step and I'm curious to see if the package will be well received by Chinese citizens.
The price target is $13.60 and the stock is covered by 26 analysts.
Buy
16
Hold
8
Sell
2
Xpeng Inc is a China-based company engaged in design, development, production and sales of smart electric vehicles (Smart EV). The Company's primary products are environmentally friendly vehicles, namely an SUV (the G3) and a four-door sports sedan (the P7). The Company’s Smart EVs primarily target the mid- to high-end segment in China’s passenger vehicle market. The Company aims developing full-stack autonomous driving technology, in-car intelligent operating system and core vehicle systems in-house through the its proprietary software, core hardware and data technologies. The Company sells its vehicle products under the brand Xpeng. It also provides a range of services to the clients, including supercharging service, maintenance service, ride-hailing service and vehicle leasing service.
